Euro Forecast: EUR/USD Defends Weekly Low Ahead of Euro Area GDP Report

Euro Outlook: EUR/USD

EUR/USD is little changed from the start of the week amid the failed attempt to test the November 2021 high (1.1617), but the exchange rate may continue to coil above the 50-Day SMA (1.0890) as it defends the weekly low (1.1308).

Euro Forecast: EUR/USD Defends Weekly Low Ahead of Euro Area GDP Report

The range bound price action in EUR/USD may turn out to be temporary as it fulfilled a cup-and-handle formation earlier this month, and the exchange rate may continue to establish a bullish trend as it appears to be tracking the positive slope in the moving average.

Join David Song for the Weekly Fundamental Market Outlook webinar.

David provides a market overview and takes questions in real-time. Register Here

Euro Economic Calendar

Looking ahead, data prints coming out of the Euro Area may sway EUR/USD as the Gross Domestic Product (GDP) report is anticipated to show the economy growing another 0.2% in the first quarter of 2025, and a positive development may push the European Central Bank (ECB) to the sidelines as the economy shows little signs of a recession.

In turn, waning expectations for another ECB rate cut may generate a bullish reaction in the Euro, but a weaker-than-expected GDP print may drag on EUR/USD as it puts pressure on the Governing Council to implement lower interest rates.

With that said, EUR/USD may face a larger pullback should it fail to defend the weekly low (1.1308), but the exchange rate may stage further attempts to test the November 2021 high (1.1617) as it establishes a bullish trend.

EUR/USD Chart – Daily

Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView

EUR/USD may consolidate over the remainder of the month as the Relative Strength Index (RSI) no longer reflects an overbought reading, but failure to hold above the weekly low (1.1308) may push the exchange rate towards the 1.1260 (61.8% Fibonacci extension) to 1.1280 (61.8% Fibonacci retracement) region.
A break/close below 1.1170 (50% Fibonacci retracement) brings the 1.1070 (23.6% Fibonacci retracement) to 1.1090 (38.2% Fibonacci extension) zone on the radar, with the next area of interest coming in around 1.0940 (50% Fibonacci retracement) to 1.0960 (23.6% Fibonacci extension).
At the same time, a move above the 1.1390 (78.6% Fibonacci extension) to 1.1440 (61.8% Fibonacci extension) region may push EUR/USD back towards 1.1560 (100% Fibonacci extension), with a breach above the monthly high (1.1573) raising the scope for a test of the November 2021 high (1.1617).

Additional Market Outlooks

AUD/USD V-Shape Recovery Stalls Ahead of December High

GBP/USD Rebound Vulnerable to Weak UK Retail Sales Report

Gold Price Coils Above 50-Day SMA

Canadian Dollar Forecast: USD/CAD Cracks November Low Ahead of Election

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.